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AGENDA ITEM #: 18.
DATE: 06/21/2021
AI #:314
 
COMMUNITY FACILITIES DISTRICT REPORT
 
SUBJECT: PREPAYMENT OF DEBT WITHIN THE ESTRELLA MOUNTAIN RANCH CFD
 
STAFF PRESENTER(S): Jared Askelson, Deputy Finance Director

SUMMARY

Resolution EMRCFD RES 2021-140 authorizes the defeasance of a portion of the Estrella Mountain Ranch CFD Series 2017 General Obligation debt.

Recommendation

ADOPT RESOLUTION EMRCFD RES 2021-140 AUTHORIZING AND PROVIDING FOR THE TRANSFER OF AVAILABLE DISTRICT FUNDS TO DEFEASE AND REDEEM A PORTION OF ITS OUTSTANDING DISTRICT GENERAL OBLIGATION REFUNDING BONDS, SERIES 2017, THE DIRECT PAYMENT, OR THE EXECUTION OF A DEPOSITORY TRUST AGREEMENT FOR THE SAFEKEEPING AND HANDLING, OF MONEYS TO BE USED TO PAY THE BONDS BEING DEFEASED; APPROVING THE FORM OF CERTAIN DOCUMENTS AND AUTHORIZING COMPLETION, EXECUTION AND DELIVERY THEREOF; AUTHORIZING THE TAKING OF ALL OTHER ACTIONS NECESSARY TO THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS RESOLUTION; AND RATIFYING THE ACTIONS OF ALL OFFICERS AND AGENTS OF THE DISTRICT AND OTHERS WITH RESPECT TO THE TRANSFER, PREPAYMENT, DEFEASANCE AND REDEMPTION. (Jared Askelson, Deputy Finance Director)

FISCAL IMPACT

This action will result in the prepayment of approximately $2,381,800 using available fund balance within the district’s debt service fund.  The current value savings is estimated to be $388,100.  The prepayment of debt will decrease the debt service fund balance in line with recent state statute revisions.

BACKGROUND AND PREVIOUS ACTIONS

In March of this year, House Bill 2317 was approved by the State Legislature and signed into law by the Governor.  As an emergency measure, it immediately went into effect.  The bill changed various CFD related statutes including 48-719 pertaining to tax levies.  The bill added language to effectively limit the debt service fund balance of each CFD to 10% of its debt service payments.  Previous statute revisions had placed a similar fund balance threshold on municipal debt service funds, but included a two-year transition period to allow for a smoother implementation of the change.  HB 2317 has no such provision, requiring immediate action to bring the CFDs in compliance with the law.

As Estrella Mountain Ranch CFD currently does not have any debt eligible to be called for prepayment, a defeasance will be completed.  A defeasance requires the district to deposit the amount of the prepayment with a trust agency.  The trust agency takes on the responsibility of paying future debt service payments.

STAFF ANALYSIS

This action will allow the district to reach compliance with new debt service fund balance requirements enacted by the State this year.

Attachments